PPIH Earnings: Inbound Tourist Sales and Private Labels Drove Record Margins; Raising Valuation

No-moat Pan Pacific International Holdings, or PPIH, reported fiscal second-quarter 2024 (year-ending June 2024) results that exceeded our profit estimates, thanks to robust tax-free and private label sales. Management also reduced operational expenses for the general merchandise store segment, which drove a higher operating margin for the company. Management lifted its full-year guidance, primarily for the profit expectations. Before earnings, we had forecast operating profit to exceed management’s guidance and continue to expect the same for the updated guidance.